s
TO: Mayor and City Council
FROM: Philippe Eskandar, City Manager
BY: Amber Shah, Parks & Public Works Director/City Engineer DATE: February 28, 2025
SUBJECT: APPROVAL OF AMENDMENT NO. 3 WITH ECONOMICS,
INC. IN THE AMOUNT OF $198,910 FOR SOLID WASTE
CONSULTING SERVICES AND AUTHORIZATION TO ISSUE
A REQUEST FOR PROPOSALS (RFP) FOR MUNICIPAL
SOLID WASTE AND DIVERTIBLE MATERIALS
COLLECTION, PROCESSING, DISPOSAL AND
TRANSPORTATION SERVICES
STRATEGIC PLAN CRITICAL SUCCESS FACTORS
Efficient, Responsive, and Effective City Services
Fiscally Responsible and Transparent City Government
Well-Maintained Infrastructure
BACKGROUND
The City of San Marino has contracted with Athens to provide waste collection services to some degree for nearly 50 years. The existing agreement By and Between the City of San Marino and Arakelian Enterprises, Inc., DBA Athens Services, for Solid Waste & Recyclables Collections was entered into on October 1, 2003 and has been amended four times, most recently in October 2023. The most recent Amendment No. 4 was approved to extend the term of the contract for two additional years through December 31, 2025, in order to continue services with Athens and provide time to conduct negotiations for a new agreement, or if the negotiations are unsuccessful, for the City to procure a new contract through other means. The contract is currently operating on a month-to-month basis through the remainder of the term and does not reflect modern industry standards, particularly in compliance with SB 1383, the State’s Short Lived Climate Pollutants Act.
Gretchen Shepherd Romey, Mayor
Tony Chou, Vice Mayor
Hunter Chang, Council Member
John Chou, Council Member
Calvin Lo, Council Member
Given the complexity of solid waste agreements, particularly a new agreement incorporating the necessary SB 1383 provisions, in 2023 the City retained Economics, a solid waste subject matter expert to assist with negotiations.
With the short-term extension of Athens contract secured, Amendment No. 1 with Economics was also approved on October 11, 2023, increasing the compensation to $210,000 for the negotiations of a new SB 1383 compliant contract. Amendment No. 2 was approved on December 11, 2024, extending the term for an additional year. Economics has been crucial to the negotiations, as they have provided valuable analysis of the existing agreement, helped the City obtain a short-term extension in order to negotiate a new agreement, and have assisted the City with negotiations to this point.
Exclusive negotiations with Athens have been ongoing for more than a year, with significant challenges in securing terms that meet regulatory compliance and provide a defensible rate structure for residents. As such, the City may exercise its right to end the exclusive negotiation period with Athens that was a requirement of their current contract through December 31, 2024 and now issue a Request for Proposals (RFP) for waste hauling services, enabling an open, competitive process for the services. Athens will be eligible to participate in this competitive process alongside other qualified haulers. Given the complex nature of developing a RFP for waste hauling services, as well as the fact that the City has not issued a RFP for waste hauling services in more than two decades, an additional amendment to the agreement with Economics is recommended for their continued assistance with the RFP process.
DISCUSSION
For more than the past year, the City has engaged in good-faith negotiations with Athens, including utilizing an independent subject matter expert to facilitate discussions. After over fourteen months of negotiations, Athens has yet to agree to proposed contract language designed to ensure SB 1383 compliance, or to propose a rate that staff and Economics are comfortable recommending based on the current market. Athens has been unable to agree to a contract that:
• Meets SB 1383 Compliance Requirements – Programs required under SB 1383, including proper organic waste diversion, outreach, education, monitoring, reporting, and enforcement provisions have not been implemented or agreed to by Athens. A prior notice of non-compliance was issued to the City by CalRecycle in February 2022 for deficiencies related to the State law for Mandatory Commercial Organics Recycling (MORe), also known as AB 1826, and thereby SB 1383 which had gone into effect on January 1, 2022 requiring implantation of organics recycling for all residents and businesses statewide. Continued noncompliance increases the City’s exposure to liability and potential enforcement action.
• Provides a Defensible Rate for Residents – Pricing discussions have not resulted in competitive or justifiable rates compared to industry benchmarks. A more competitive proposal may be achieved through an open bidding process.
Given the limited time before the contract with Athens expires on December 31, 2025, continuing exclusive negotiations with Athens risks forcing the City into an unfavorable agreement that does not meet regulatory requirements or provide cost-effective service to residents. Moving forward with the RFP process will ensure that the City can:
1. Attract Competitive Bids – Preliminary market research suggests that multiple waste haulers may be interested in submitting proposals under terms that align with the City’s needs. There is significant overlap in the contract language and requirements that have been incorporated in the City’s contract that have been executed by other haulers in the cities of Laguna Beach, Laguna Hills, Lake Forest, Newport Beach, Rancho Mirage and Tustin.
2. Ensure Regulatory Compliance – A new contract will incorporate all required SB 1383 provisions, reducing the City’s liability. A detailed scope of work provides the specificity necessary to ensure the City is able to meet its compliance obligations and provides staff a clear framework for overseeing the administration of the contract. This is particularly important given the fact that the City maintains a very lean operation that does not allow any one staff person to be fully dedicated to the oversight of the solid waste operations in the City on a full-time basis, unlike many other larger cities.
3. Maintain High-Quality Service – While service continuity is a consideration, the RFP will specify the need to maintain backyard collection; ensuring bidders meet the City’s unique requirements.
Service will however, transition from a 2-barrel to a 3-barrel system for the separate collection of refuse (black barrel), recyclables (blue barrel), and green waste/food waste (green barrel). Although refuse and recyclables have been able to be collected together in 1-barrel to date and subsequently separated at Athens’ Materials Recovery Facility (MRF), this process is no longer able to meet the diversion requirements of SB 1383.
SUBJECT MATTER EXPERT CONTRACT AMENDMENT
To successfully develop and execute the RFP process, staff recommends amending the current agreement with Economics. The services of Economics are necessary for preparing the RFP documents, assisting in the evaluation of proposals, and providing technical expertise throughout the selection process.
The cost proposal for these services represents $125,635 of the $198,910 total cost of the proposed contract amendment. This cost is lower than the typical RFP development cost for waste collection services that can range upwards of $200,000 because much of the necessary documentation including contract provisions and the rate model used to assess hauler pricing has already been developed during negotiations with Athens.
The remaining cost of $73,275 included in the proposal for this contract amendment is to provide assistance with SB 1383 implementation programs.
In addition to the need for a SB 1383 compliant contract for waste collection services, there are other programmatic requirements of SB 1383 that jurisdictions are required to comply with that are within the City’s control and responsibility to begin implementing including:
• CalRecycle Annual Reporting and Site Visits
• Maintenance SB 1383 Implementation Records
• Development and Implementation of SB 1383 Enforcement Protocols • Development of SB 1383 Commercial Business Waiver Protocols • Development of Self-Haul Program
• Development of Environmentally Preferable Purchasing Policy • Compliance with CalGreen, C&D, and MWELO ordinances
• Procurement of Recycled Organics Content Products
As noted earlier, Economics’ experience and subject matter expertise will be invaluable as the City moves forward with SB 1383 rollout and compliance.
These SB 1383 compliance services would be necessary regardless of waste hauler and independent from the RFP process to ensure all programs within the control of the City are compliant with SB 1383.
Staff has worked diligently to negotiate a new agreement with Athens but has been unable to reach terms that satisfy the City’s compliance and cost objectives. Issuing a RFP will allow the City to pursue a more favorable contract while maintaining service continuity. Additionally, approval of Amendment No. 3 to the agreement with Economics will ensure the City has the necessary technical support to conduct a successful RFP process and implementation of SB 1383 compliant programs.
FISCAL IMPACT & PROCUREMENT REVIEW
The adopted FY 2024-25 budget includes $100,000 in Account No. 101-40- 4104-0000 (Contract Engineering Services) for solid waste consulting services. In order to cover the cost of the portion work expected to be completed during the remainder of this fiscal year under Amendment No. 3 with Economics, a budget amendment is necessary to appropriate an additional $90,000 in Account No. 101-40-4104-0000. The remaining cost will be budgeted for in FY 2025-26.
LEGAL REVIEW
The City Attorney's office has reviewed and approved as to form.
RECOMMENDATION
Staff recommends that the City Council approve Amendment No. 3 to the agreement with Economics, Inc. for solid waste consulting services and authorize staff to issue a RFP for solid waste and recycling services. If the Council concurs with staff’s recommendation, an appropriate motion would be:
“I move to 1) approve Amendment No. 3 to the agreement with Economics, Inc. for solid waste consulting services in the amount of $198,910, 2) authorize the City Manager to execute the Amendment on behalf of the City, 3) approve a budget amendment for FY 2024-25 adding $90,000 to Account # 101-40-4104-0000 and 4) authorize staff to issue a Request for Proposals (RFP) for municipal solid waste and divertible materials collection, processing, disposal and transportation services.”
ATTACHMENTS
1. Draft Amendment No. 3 with Economics, Inc.
2. Original Agreement with Economics and Amendments No.1 & 2